When used properly, a 401k can be a great retirement savings vehicle. With employer matches, automatic deposits, diversified investments and relatively high contribution limits, a good 401k plan almost forces you to do what comes so hard to many Americans — save and invest.

A 401k is a defined contribution plan, which means that you’re allowed to make contributions as an employee. Check out these nine strategies to hone your retirement skills and make the most of your 401k plan.

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Strategies to Maximize Your 401k Account

From taking advantage of employer benefits to increasing your contributions, you have a choice of a number of 401k strategies that can make a difference. Here are nine solutions for how to maximize your 401k contributions:

1. Get Your Full Employer Match

Many employers will match — give you — at least a portion of the money you contribute to your plan, and that money goes right into your 401k. It immediately boosts your account’s value, and you don’t have to pay tax on it.

The first step to take full advantage of this employment benefit is to check the terms of your plan. You’ll want to contribute at least the minimum amount that will qualify you to receive the matching funds. For example, if you earn $75,000 and need to contribute at least 5 percent to get the match, you will need to contribute $3,750 to allow your employer to make a matching deposit of $3,750; you’ll not only benefit from the additional deposit but also the compound interest accruing on your balance.

2. Set Up Automatic Contributions

Once you determine your contribution amount for your 401k, you can have it automatically deducted from your paycheck and deposited in your 401k account. For example, if your paycheck is $5,000 and you agree to a 10 percent contribution rate, then you’ll receive $4,500 — minus any deductions for taxes or other services. Many employers will automatically enroll employees in a 401k plan as soon as they are eligible, but it’s up to you to adjust your contribution amount or percentage according to your retirement planning needs.

When your money is automatically taken out of your paycheck, you’re less likely to spend it on something else. Meanwhile, that money is growing your retirement savings. Studies have shown that the people who are in the best financial position at retirement are the ones who participated in employer-sponsored retirement plans and opted for automatic contributions.

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3. Max Out Your 401k Contributions

The best way to maximize your 401k account is to contribute the annual limit, and the IRS reassesses 401k contribution limits every year, so check for updates. For the 2017 tax year, the 401k contribution limit was $18,000 of earned income; the limit has been increased to $18,500 for the 2018 tax year. The amount you contribute cannot exceed the amount of your annual pay, so if you earn only $12,000, for example, you can’t contribute more than $12,000.

The IRS also limits the amount of total contributions you can make to a 401k plan. The total contribution limit includes employer-matching contributions and lesser-used additions, such as employer nonelective contributions and allocations of forfeitures. The total amount you can contribute to your 401k plan in any one year is $55,000.

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4. Increase Contributions Automatically

A simple trick to help maximize your 401k savings is to automatically increase your contribution rate every month, quarter or year. Increase your contribution by 1 percent every year, and you’ll be significantly increasing your contributions over time — and you’ll likely not even notice the increase. For example, say you start saving 6 percent of your $40,000 annual salary, which amounts to a weekly contribution of $46.15. Then increase that rate by 1 percent a year, and your weekly contribution would go from $46.15 the first year to $53.85 the next year, and so on.

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5. Contribute Bonuses, Tax Refunds and Raises

Another easy way to boost your 401k plan is to invest your pay raises and other lump sums of money into your account. When you get a raise, consider raising your 401k contribution rate by the same amount — you’ll still be living on the same amount of money you’re used to, but your retirement savings will get an immediate kick. At the very least, consider raising your contribution by a few additional percentage points, which can increase your retirement savings and prevent “lifestyle creep” — the tendency to spend more when you have more.

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6. Make Catch-Up Contributions

You have an opportunity to save even more for your retirement if you’re 50 or older. On top of the 2018 tax year’s individual maximum contribution of $18,500, the IRS allows those who will turn 50 or older by the end of the calendar year to make an additional $6,000 in elective contributions.

Adding an additional $6,000 per year from the time you turn 50 until you reach retirement age at 65, for example, can result in an additional $90,000 in your account.

7. Consider a Roth 401k

You’re likely familiar with the tax benefits if you’re already contributing to a traditional 401k plan. For starters, your contributions are pretax, meaning you don’t have to claim what you contribute as income when you file your taxes. Additionally, the money you put in your 401k grows tax-deferred, meaning you don’t have to pay income tax on it until you withdraw it.

Roth 401ks are subject to a different set of tax benefits. You won’t get to exclude your contributions from your income, meaning you’ll be paying tax on them before you put them in your account. When you take your money out, however, you won’t owe income tax on your earnings or your contributions. The Roth 401k might be a better way to maximize your 401k contributions if you anticipate being in a higher tax bracket at retirement.

8. Choose Low-Cost Investments

Your 401k might seem like a free investment because you probably don’t pay upfront sales charges to invest in a fund — but your plan carries a cost. Typically, some of the available funds in a 401k plan charge more in investment fees than others. And some funds might charge an upfront commission, which you might not know about unless you review the fee disclosure statement that all 401k plans are required to provide.

The bottom line is that the less you pay in fees, the more you money you can save or invest. Over decades of investing, these fees could shave 25 percent off your total return. Index funds, which invest in defined indexes like the Standard & Poor’s 500 index or the Dow Jones industrial average, typically carry lower costs than more actively managed funds.

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9. Try a Solo 401k

You can still participate in a retirement plan if you’re self-employed. Legally, as long as you have self-employment income, you’re entitled to establish and contribute to a solo 401k plan, which the IRS calls a one-participant 401k plan.

The good news about a solo 401k plan is that as both an employer and an employee, you’re allowed to make both types of contributions. For the 2018 tax year, this means that you can contribute $18,500 as an employee — assuming you earn at least $18,500 — and up to 25 percent of your compensation as an employer. So, if you earned $40,000, you could contribute $18,500 as an employee and $10,000 as an employee for a total contribution of $28,500.

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